Sources earlier said armed supporters of Muqtada al-Sadr had taken control of the city after fighting erupted over the killing of a Mahdi army leader at a checkpoint.
 
Witnesses said Mahdi army fighters ignored al-Sadr's recent appeal for holding fire and fought street battles with government forces. 

The British military said leaders of political parties in Basra had held urgent talks to calm tensions in the city after the clashes.

Major Jamie Halford-Macleod, a British military spokesman, said shots had been fired at the Shatt-al-Arab Hotel, headquarters of the Iraqi security forces, in the north of the city.

Turf war

Halford-Macleod said armed men also opened fire on the provincial joint co-ordination centre, from where British forces pulled out in late August as part of their withdrawal from the city centre to their main base on the outskirts of Basra.

The riverside city of more than 1 million people has witnessed a turf war between rival Shia groups, including the Mahdi army, the Supreme Iraqi Islamic Council, and the smaller Fadhila party which controls the governorate.

Earlier reports from Basra said Major-General Mohan al-Firaiji, commander of Iraqi security operations in the city, fled during the fighting.

But Halford-Macleod said al-Firaiji was meeting leaders of political parties.

"We maintain overall responsibility for Basra province and will respond as deemed necessary. Certainly there is no request from General Mohan [al-Firaiji] for any assistance from us," he said.

Khalaf said fighting had subsided. "The situation has been put under control while army and police patrols are deployed in all parts of Basra.  Major general Mohan al-Feraiji is moving around the town to supervise security measures."

"We are determined to maintain law and order, while those who violate the law would be severely punished."